Medical Marijuana in California Aspires to Go Commercial

Seems like good problems to have

LAKE FOREST, Calif. — Sellers of marijuana as a medicine here don’t fret about raids any more. They’ve stopped stressing over where to hide their stash or how to move it unseen.

Now their concerns involve the state Board of Equalization, which collects sales tax and requires a retailer ID number. Or city planning offices, which insist that staircases comply with the Americans With Disabilities Act. Then there is marketing strategy, which can mean paying to be a “featured dispensary” on a Web site for pot smokers.

After years in the shadows, medical marijuana in California is aspiring to crack the commercial mainstream.

“I want to do everything I can to run this as a legitimate business,” says Jan Werner, 55 years old, who invested in a pot store in a shopping mall after 36 years as a car salesman.

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Some now are using traditional business practices like political lobbying and supply-chain consolidation. Others are seeking capital or offering investment banking for pot purveyors. In Oakland, a school offers courses such as “Cannabusiness 102” and calls itself Oaksterdam University, after the pot-friendly Dutch city. As shops proliferate, there are even signs the nascent industry could be heading for another familiar business phenomenon: the bubble.

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As the business matures, ancillary ventures are springing up. In Oakland, OD Media manages advertising and branding for about a dozen pot clients. An Oakland lawyer, James Anthony, and three partners have started a firm called Harborside Management Associates to give dealers business advice. A pot activist named Richard Cowan has opened what he envisions as an investment bank for pot-related businesses, called General Marijuana.

Mr. Cowan is also chief financial officer of Cannabis Science Inc., which is trying to market a pot lozenge for nonsmokers. It was founded by Steve Kubby, a longtime medical-marijuana advocate who a decade ago was acquitted of a pot-growing charge but briefly jailed for having illegal mushrooms in his home. Mr. Kubby says there is “no more alternative culture” at the company, which went public in March and has hired a former pharmaceutical-industry scientist to try to win Food and Drug Administration approval for the lozenge.

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and wherever there’s a confluence of money and politics, lobbyists cannot be far behind:

To defend their interests, some pot proprietors are hiring lobbyists. Messrs. Shofner and Werner pay consulting fees to Ryan Michaels, a political organizer with an expertise in med-pot compliance issues.

There are signs medical pot’s increasing business legitimacy is crowding the market. A 20-mile stretch of Ventura Boulevard in the San Fernando Valley now has close to 100 places to buy. “So many dispensaries have come along, the prices are dropping,” says one operator, Calvin Frye. Two years ago, his least expensive pot was about $60 for an eighth of an ounce. Now it is $45.

Across the country, a med-pot bill is working its way through New York’s state legislature. If it makes it, entrepreneurs are getting ready.

Larry Lodi, a 49-year-old Little League umpire from Long Island, spent two days at Oaksterdam University in May, learning the fine points of cultivation and distribution. Mr. Lodi envisions a business that would link the growers and the sellers of medical marijuana. “I want to be the middleman,” he says.